The report – a submission to the government’s inquiry into private vocational education and training providers – said the federal government is failing in its responsibilities as a lender given it makes no assessment of the suitability of the loan for the prospective borrower.

Women working part-time were the main driver of such a large volume of FEE-HELP loans for vocational courses never being repaid, according to the report. This was due to their decreased likelihood of earning more than the repayment threshold – currently just over A$53,000 – because they took time out of the work force to raise children, and were over-represented in low-paying jobs.

Rates of doubtful debt (debt not expected to be repaid) in higher education was 21%.

The report also raised concerns that only a quarter of those who undertook vocational courses in 2011 completed them by the end of 2013, compared to more than 70% of students in higher education.

Some courses had worse repayment rates than others, with students of community services and beauty therapy the least likely to repay their debts.

Report author Andrew Norton, who undertook a government review into higher education in 2014, said the A$53,000 threshold was too generous and it could be lowered.

He said it could be lowered to be in line with the A$50,000 recommendation in the government’s controversial higher education bill, currently before parliament and looking increasingly likely to be voted down.

Lowering the repayment threshold to this level would reduce the doubtful debt from 40% to 30%, according to the report.

Norton said there was evidence people manipulated their taxable income to stay below HELP thresholds, but lowering the threshold would only help to combat this practice.

“There are limits to how much repayment can be avoided without it seriously affecting the HELP debtor’s lifestyle and career prospects,” he said.

“One thing a lower initial threshold would do is make repayment avoidance harder for the people manipulating their taxable income to keep it just below the current threshold.”

However, Norton said the easiest way to reduce new doubtful debt was to end HELP eligibility for certain education providers or courses.

“There is provision under the current legislation for this to be done. While I believe this should be considered seriously, it is a big change in the practice of HELP,” he said.

“It is the end of no questions asked lending for people admitted to certain qualifications, and the start of a system in which credit worthiness is taken into account.”

RMIT higher education policy analyst Gavin Moodie said lowering the repayment threshold was not a viable option because according to the table from the report below, the biggest group of diploma and advanced diploma graduates to start repaying a HELP debt the repayment threshold would have to be cut to $31,200, which he said “is far too low”.

Grattan Institute

Moodie said there were alternatives for dealing with the cost of HELP, including putting a cap on the amount people could borrow for HELP loans, or just accepting that HELP debt will not be repaid by some students – especially vocational students – which would act as a subsidy for these programs and providers.

“This targets subsidies on individuals according to their capacity to repay their loan rather than on programs or providers,” he said.

According to Moodie, a third option would be to increase direct subsidies to the programs which are considered to have a social benefit, but which won’t necessarily mean higher incomes for the graduates.

“This would lower fees and thus the debts that students incur and potentially don’t repay,” he said.